Yesterday, the Bureau of Labor Statistics reported the consumer price index rose by 2.4% in September 2024 on an annual basis. This is down from 2.5% reported in August. Economists had predicted a lower CPI reading.
The food prices increased. The price of eggs, frozen juices and drinks, butter, motor vehicle insurance, and sporting events tickets are some of the items rising the most annually. Gasoline prices fell sharply, helping the CPI report. The cost of gas averaged around $3.21 in September, compared to $3.84 last year.
Investors need to look ahead. Gas prices could rise again after WTI crude prices bounced back. Rising tensions in Israel are pressuring oil prices after Iran fired missiles. Expect oil suppliers to cut output, raising oil prices. Investors should watch energy stocks like Exxon Mobil (XOM), Devon Energy (DVN), Occidental Petroleum (OXY), Shell Plc (SHEL), and TotalEnergies (TTE). Their share prices will break out to new highs if crude prices continue to rise this month.
Fed Target Change
Last month, the Fed indicated a greater tolerance for higher inflation. The central bank cut interest rates by 50 bps. This suggests that the Feds may allow interest to persist at above 2.0%. Consumers may disagree. Shelter costs are still high, forcing consumers to spend less on brand-name food products like Pepsi (PEP) and Coca-Cola (KO).
